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A number of Russian banks have been removed from the international global payment network known as SWIFT. The decision to remove Russian banks from the system is meant to put pressure on Vladimir Putin to end his invasion of Ukraine. EC President Ursula von der Leyen said of the move that “This will ensure that these banks are disconnected from the international financial system and harm their ability to operate globally.” The banking sanctions have already led to a crash in the value of the Russian ruble. Laurence Norman, Bojan Pancevski, and Gordon Lubold report for The Wall Street Journal:
The EU, U.S., Canada and the U.K. will also target Russia’s central bank to prevent it from deploying its war chest of reserves. According to a senior EU official, the idea would be to prevent it selling its foreign assets for local currency to prop up Russian banks and firms hit by sanctions. That could effectively freeze a large part of Russia’s reserves abroad.
Those reserves—composed of gold, bonds, deposits and securities denominated in foreign currencies—are critical for Russia’s efforts to halt the ruble’s depreciation and slow inflation from the currency’s weakness.
“We will paralyze the assets of Russia’s central bank,” Ms. von der Leyen said.
The moves announced also created a task force to go after the physical assets of sanctioned companies and Russian oligarchs—including their yachts, luxury cars and homes—as well as an effort to curb so-called golden passports that allow Russian elites to essentially buy citizenship in other countries.
The latest measures are the third set of Western sanctions issued in response to Russia’s invasion of Ukraine.
In recent days, the U.S., the U.K., the EU and some of its partners have announced measures to sanction some Russian banks, to ban Russia’s sale of debt and to ban some technology exports to Russia’s energy sector and other key companies. They have also targeted large numbers of Russian officials, lawmakers and Russian business executives.
Ukrainian President Volodymyr Zelensky has been lobbying western capitals to beef up the sanctions against Russia. Saturday’s announcements left open some loopholes. Most notably, by knocking some but not all Russian banks off Swift, the EU has kept open payment channels for the purchase of Russian natural gas, upon which it is heavily dependent for its energy needs. The U.S. measures have also created carve-outs for oil purchases.
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